Law of Equilibrium-Will you be around next year?

Education & Training with The Real Estate Masters Institute

As I am reading through the "Shift" book by Gary Keller, one concept has jumped out at me:  The Law of Equilibrium.  Essentially what this states is the number of units closed per realtor every year is a relative constant.  Now you may be saying I am crazy because so many people are having an off year, but eventually what will happen is the number of agents in this business will increase or decrease accordingly with the number of closings available.  For example, when I got into real estate in 1996, to my recollection there were approximately 800,000 members of NAR.  As the market heated up across the country and as year after year records were being broken that number soared to about 1.4 million.  The number of closed units per realtor averaged about the same after a fair amount of time was allowed for the adjustment to take place.  Well, the same thing will happen in this market over the next 6-18 months.  The only reason I personally feel it hasn't happened faster is because so many agents were in denial about their business in January 2008 and they stayed in, paying board dues for another year.

Here is the good news with all of the turbulent news in the market:  If you survive this shift you will thrive in the next uptick.   But you need to do whatever it takes to make it through this difficult time.  You must cut costs furiously.  You must lead generate like you've never lead generated before.  You must shake more hands and kiss babies like you are running for President.  You need more leads than you ever needed before because fewer buyers have urgency and even fewer buyers are qualifying for loans with the ever changing mortgage scenarios. 

And, believe it or not, you can actually thrive in this marketplace and GAIN market share.  If you are willing to do the required activities and adjust your systems until they are the best, if you focus on bullet proofing the transaction, and get into an accountability relationship with a coach, you will begin taking business away from other agents who are on the cusp of leaving this industry.  The most beautiful thing of all of this is that whatever market share you capture now should be maintained when the market turns around.  For example, let's say your target market closes 1000 units this year and you increase your annual sales from 35 up to 50 units, you have increased your market share from 3.5% up to 5%.  Now, imagine the turn around comes in the market and your area goes from closing 1000 units to 1500 units while you maintain your new found 5% market share, that means you go from closing 50 units up to 75 just like that!  It is a beautiful thing!  In most market places that represents a gain of at least $100,000 in income!

This is an incredible time of opportunity!  Go out and GRAB MORE THAN YOUR FAIR SHARE!

If you have any questions about what to look for in a coaching relationship, or to find out more specifically about the services my company provides, do not hesitate emailing or calling me.

Always Remember, There Are No Limits!


Comments (3)

Leslie Prest
Leslie Prest, Prest Realty, Sales and Rentals in Payson, AZ - Payson, AZ
Owner, Assoc. Broker, Prest Realty, Payson,

I've been in RE for 19 years. Now if you looked at all 19 years, and took an average of closings for say, any given 5 years, it would probably be pretty constant. But if you looked at, say, t5his year versus 2005, it would be WAY different.

Sep 19, 2008 07:39 AM
Jeff Bonham

Absolutely, Leslie.  You hit the nail on the head.  The aftershock, if you will, takes a little bit of time to reach equilibrium.  I overheard an associate today mention he heard NAR's estimate will be a drop off of 400,000 Realtors in the near future.  It will take time, but the equilibrium will kick in.  The key will be to determine if we are going to be the ones left standing on the opposite side of this market and if we will survive or even thrive during it.  The market share we gain now will be market share we can keep when it turns around.  It is an awesome opportunity for the skills based agent right now. 

Thanks for reading my post and thanks for the comment!


Sep 24, 2008 08:44 AM
Franklin & Brentwood, TN Homes Mike Nastri
Keller Williams Realty - Franklin, TN
It matters to us as much as it matters to you.

Hey Jeff,

Thanks for helping the Syracuse Market Center Launch.  Best wishes in your future endeavors.


Nov 22, 2008 07:15 AM